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Concepts, Theory, and Techniques THE LOT‐SIZE REORDER‐POINT MODEL WITH UPSTREAM‐DOWNSTREAM UNCERTAINTY *
Author(s) -
Noori A. Hamid,
Keller Gerald
Publication year - 1986
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1986.tb00227.x
Subject(s) - upstream (networking) , downstream (manufacturing) , computer science , point (geometry) , random variable , variable (mathematics) , certainty , standard deviation , reorder point , operations research , mathematical optimization , mathematics , operations management , statistics , supply chain , economics , business , economic order quantity , marketing , computer network , mathematical analysis , geometry
One assumption in the classical lot‐size problem is certainty in the amount requisitioned. In many practical situations, however, the amount received may be a random variable. In this paper, we discuss a lot‐size inventory problem in which the quantity received does not necessarily match the quantity requisitioned. We develop explicit and approximate solutions for the back‐orders case by assuming that the standard deviation of the amount received is linearly related to the quantity requisitioned.